Ann: Joint Venture with Ganfeng - Overview, page-68

Ozblue - agreed that Ganfeng will want to see rapid construction, exploration and expansion of Goulamina

Once the deal is signed I'm looking forward to GanFFX:

• Accelerating EPC timeline
• Aggressively drilling to do our resource justice (we were finding so much lithium that we were struggling to find a place to put the plant, most strikes are still open in all directions)
• Fast tracking stage 2 + downstream processing

I think it's time for us to get to know our new buddies. We know Ganfeng are serious players in the lithium chemical processing space. How serious? 2nd largest hydroxide producer and largest overall lithium metals producer. Below (Figure 1) is an overview of their involvement across the entire lithium supply chain, and it's extensive... I'll also point out battery recycling (ties in nicely with circular economy/ESG trends) - Ganfeng are one of the few majors which are involved in this, along with CATL. I don't believe SQM/ALB/Tianqi are involved but open to correction

What interests me the most though is their market dominance in building new chemical plants - they have an in-house EPC team delivering lowest global CAPEX intensity (Figure 2). I think you can see where I'm going with this.

Figure 1


Figure 2


I assume Ganfeng would eventually be supplying the European market with lithium hydroxide and/or battery cells made with lithium from Goulamina. Their major customers for lithium compounds include Volkswagen, BMW and some of their suppliers (CATL / Samsung / Northvolt) (Figure 3), all of which have existing or near-term planned battery production facilities (Figure 4). But Ganfeng's current processing and battery manufacturing capability is all in China. They would potentially need to set up at least a processing facility or both processing and battery production facilities in Europe to remain economically viable against competitors keeping the entire supply chain within Europe (or at least more economic than shipping from Mali to China to Europe).

OR set up chemical/hydroxide processing in Mali to supply battery manufacturers in Europe and potentially plan for future battery production in Europe. It would be more economic for processing to be done in Mali due to lower CAPEX, labour and transport costs (effectively lower emissions too), and greater access to on-site solar power gen in sunny Mali (land would be cheaper too, though opportunity cost might not be if we still can't find a spot for it without lithium a few feet below). It could also create an additional revenue stream if it becomes a processing hub for West African neighbours. From memory, the Mali gov't had ambitions in 2017/18 to turn the region into THE lithium mining and processing hub of West Africa. Maybe that ambition will return with this deal

Figure 3

Figure 4


My main counter point is that Ganfeng may want to capture more value from processing themselves in China/Europe as the owner of the IP, though based on the cost savings listed above I imagine the %ROI for their share of the JV would likely be greater than going solo in Europe. Also, and shipping spod to China doesn't make sense with their current offtakes located much closer than Mali, and I suspect their Avalonia spod resource will be lagging behind Goulamina to production (Figure 5). Ganfeng may consider building a facility on their own in Mali, but with our in-country experience and Management Agreement giving us oversight of Mali operations, this would seem less likely. I'd be very keen to hear others' thoughts on these counter arguments and what we can add to it

Figure 5


Now the multi-billion dollar question - what value does this give us? I won't go into calculating this as I believe there are others on this forum much more capable than me at working this out (wink wink nudge nudge Ubique). But if we take a look at the legacy PFS (Figure 6) which assessed a 2Mtpa operation with and without secondary lithium carbonate processing (and only processing 56% of the spod), secondary processing had an NPV10 4.5x greater than the standalone 2Mtpa operation. Keep in mind the original PFS was based on ~40% the DFS LOM resource and won't scale in the same way.

Figure 6



It'll be nice rubbing shoulders with the big players - they have the expertise and access to funds to move projects forward at pace, they attract market attention, and assess projects on a much longer time horizon (e.g. life of mine offtakes). I may be getting ahead of myself here, but I have to say I've missed being optimistic about the future of Goulamina. 4c was a dark time for LTHs and it's great to see how far the company has come since. Keen to see this deal inked by end of year. Fantastic work so far FFX team, keep it up!


Ganfeng Annual Report 2020 http://www.ganfenglithium.com/fileDownload/fileDir/GFL.pdfBMW battery suppliers https://www.electrive.com/2020/07/16/northvolt-becomes-3rd-battery-cell-supplier-to-bmw/
VW battery suppliers https://www.theverge.com/2021/3/15/22325813/vw-volkswagen-power-day-battery-electric-car-announcement
Gigafactories in Europe https://www.en-former.com/en/europes-battery-industry-is-booming/
FFX (BGS) Original PFS with Secondary Processing 2017 https://www.asx.com.au/asxpdf/20171004/pdf/43my78j10dlxqt.pdf